December S&P 500 E-Mini futures (ESZ24) are down -0.09%, and December Nasdaq 100 E-Mini futures (NQZ24) are down -0.21% this morning as investors awaited a new round of U.S. economic data and remarks from a Federal Reserve official.
Crude oil extended gains on Thursday as investors anticipated Israel’s response to Iran’s missile attack, with U.S. President Joe Biden urging Israel to refrain from targeting Iran’s nuclear facilities. Israel’s fighter jets struck Beirut overnight following the death of eight of its soldiers in southern Lebanon during clashes with Hezbollah.
In yesterday’s trading session, Wall Street’s major indexes ended in the green. Caesars Entertainment (CZR) climbed over +5% and was the top percentage gainer on the S&P 500 after announcing a $500 million stock buyback program. Also, chip stocks gained ground, with KLA Corp. (KLAC) advancing more than +3% and Lam Research (LRCX) rising over +2%. In addition, Salesforce (CRM) rose more than +3% and was the top percentage gainer on the Dow after Northland Securities upgraded the stock to Outperform from Market Perform with a price target of $400. On the bearish side, Nike (NKE) slumped over -6% and was the top percentage loser on the Dow after the world’s largest sportswear company reported weaker-than-expected Q1 revenue and withdrew its full-year guidance. Also, Tesla (TSLA) slid more than -3% after reporting weaker-than-expected Q3 deliveries.
The ADP National Employment report released on Wednesday showed that U.S. private nonfarm payrolls increased by 143K in September, up from 103K in August (revised from 99K) and exceeding the consensus estimate of 124K.
“[Yesterday’s] ADP employment number surprised to the upside, suggesting the labor market is bending but not breaking,” said Chris Larkin at E*Trade from Morgan Stanley. “Friday’s monthly jobs report will have the final word on the current jobs picture, and more than likely, on near-term market sentiment.”
Richmond Fed President Tom Barkin said on Wednesday that there is progress on inflation and signs that pricing power is diminishing in the economy, although he mentioned it is too premature for the central bank to declare victory. “It remains difficult to say that the inflation battle has yet been won,” Barkin said. “There is still work to do on inflation.”
Meanwhile, U.S. rate futures have priced in a 65.9% probability of a 25 basis point rate cut and a 34.1% chance of a 50 basis point rate cut at the November FOMC meeting.
Today, investors will focus on U.S. Initial Jobless Claims data. Economists estimate this figure to arrive at 222K, compared to last week’s number of 218K.
The U.S. ISM Non-Manufacturing PMI and the S&P Global Services PMI will also be closely watched today. Economists forecast the September ISM Non-Manufacturing PMI to arrive at 51.7 and the September S&P Global Services PMI to be 55.4, compared to the previous values of 51.5 and 55.7, respectively.
U.S. Factory Orders data will be reported today as well. Economists foresee this figure to stand at +0.1% m/m in August, compared to the previous figure of +5.0% m/m.
In addition, market participants will be anticipating a speech from Atlanta Fed President Raphael Bostic.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.812%, up +0.64%.
The Euro Stoxx 50 futures are down -0.68% this morning, driven by escalating geopolitical tensions in the Middle East and fading optimism surrounding China’s stimulus measures. Automobile, mining, and technology stocks led the declines on Thursday. A survey released on Thursday revealed that Eurozone business activity contracted in September, though the decline was less severe than initially estimated, while also indicating that inflationary pressures had eased. Meanwhile, European Central Bank board member Isabel Schnabel stated Wednesday that Eurozone inflation is more likely to return to the ECB’s 2% target, dropping her long-held caution about the challenges of curbing price increases. In other news, French President Emmanuel Macron supported a temporary tax on the country’s largest companies, backing his new government’s strategy to address a widening budget deficit. In corporate news, SAP Se (SAP.D.DX) fell about -1% following a report that U.S. prosecutors are expanding an investigation into possible price-fixing by the German software developer.
Spain’s Services PMI, Italy’s Services PMI, France’s Services PMI, Germany’s Services PMI, Eurozone’s Composite PMI, Eurozone’s Services PMI, and Eurozone’s PPI data were released today.
The Spanish September Services PMI stood at 57.0, stronger than expectations of 54.0.
The Italian September Services PMI arrived at 50.5, weaker than expectations of 51.2.
The French September Services PMI came in at 49.6, stronger than expectations of 48.3.
The German September Services PMI was at 50.6, in line with expectations.
Eurozone September Composite PMI arrived at 49.6, stronger than expectations of 48.9.
Eurozone September Services PMI stood at 51.4, stronger than expectations of 50.5.
Eurozone August PPI has been reported at +0.6% m/m and -2.3% y/y, stronger than expectations of +0.4% m/m and -2.4% y/y.
Japan’s Nikkei 225 Stock Index (NIK) closed up +1.97%, while mainland Chinese markets were closed for a holiday.
China’s Shanghai Composite Index was closed for the week-long National Day holiday. Mainland China’s financial markets will reopen on Tuesday, October 8th.
Japan’s Nikkei 225 Stock Index closed sharply higher today, supported by a weaker yen. Healthcare and technology stocks led the gains on Thursday. Export-oriented stocks also advanced. A private survey revealed on Thursday that Japan’s service sector activity grew for the third consecutive month in September, though the pace moderated slightly and confidence fell to its lowest since January 2023, indicating broader economic pressures amid weakness in manufacturing. Meanwhile, the yen continued its decline on Thursday after new prime minister Shigeru Ishiba stated the previous day that the economy isn’t ready for another interest rate hike following a meeting with Bank of Japan Governor Kazuo Ueda. Also, BOJ board member Asahi Noguchi stated Thursday that he believes the central bank should maintain its accommodative monetary policy stance given Japan’s prolonged history of deflation, echoing comments from the nation’s new prime minister. “It will likely take considerable time for a mindset that is consistent with the 2% price stability target to be established among the society. Until then, I believe it is most important to continue to patiently maintain accommodative financial conditions,” Noguchi said. In other news, foreign investors purchased a net 757.9 billion yen ($5.16 billion) worth of Japanese stocks in the week ending September 28th, marking their first weekly net purchase since August 10th, according to data from the Ministry of Finance. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.13% to 26.70.
The Japanese September au Jibun Bank Japan Services PMI came in at 53.1, weaker than expectations of 53.9.
Pre-Market U.S. Stock Movers
Levi Strauss (LEVI) plunged over -11% in pre-market trading after the company reported weaker-than-expected Q3 revenue and lowered its full-year revenue growth guidance.
ChargePoint (CHPT) slid more than -2% in pre-market trading after JPMorgan double-downgraded the stock to Underweight from Overweight.
Evgo (EVGO) climbed over +5% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a $7 price target.
Shoals Technologies (SHLS) gained more than +2% in pre-market trading after Citi upgraded the stock to Neutral from Sell with a price target of $5.50.
Tractor Supply (TSCO) fell over -1% in pre-market trading after Evercore ISI downgraded the stock to In Line from Outperform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - October 3rd
Constellation Brands A (STZ), AngioDynamics (ANGO).
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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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